University Response to Mayor's
Health Panel Invitation

The enabling legislation that created the National Capital Medical Center stated that “the District’s existing healthcare infrastructure is inadequate because of the uneven distribution of hospitals throughout the city.” As you know, the major hospitals that provide Level I Trauma Services are all in Northwest Washington -- a fact that acutely disadvantages residents in the eastern part of Washington.

Rather than expand our existing healthcare facilities on the main campus on Georgia Avenue, Howard University agreed to combine those funds with an equal amount from the District to develop The National Capital Medical Center, a first-rate, state of the art, Level I Trauma Center to be located in Southeast.

As one of the District’s three American College of Surgeons verified Level I Trauma Centers, Howard University Hospital is particularly qualified to partner in providing Level I Trauma Service. If the City were to build a replacement municipal hospital, it would have to pay the entire capital cost of the facility (rather than half) and an additional $400-$500 million to staff it 24/7 with the required physicians and nursing expertise.

At the outset of the partnership between Howard and the City, explicit assurances, both public and private, were made to Howard University attesting to both the Mayor's and the Council's firm support. The Mayor personally met with the University’s Board of Trustees to assure them of his support, and the Council unanimously passed the enabling NCMC legislation and the Memorandum of Understanding.

Although the project's developmental research was complex and time consuming, both parties worked assiduously, and the resulting legislation to advance the initiative was forwarded to the Council on schedule for their review and action. Three years work apparently has now been put on hold.

Your invitation to join the Mayor’s Healthcare Task Force has not changed the underlying reality that the overwhelming majority of the task force still consists of people who have been active participants in an orchestrated effort to derail the NCMC effort despite broad public support for the initiative across the City. With its membership so skewed as to suggest that the likely outcome is predetermined, the University believes that adding one Howard representative to the panel seems unlikely to produce meaningful consultation.

However, we remain hopeful that with your guidance the panel will recommend that Level I Trauma Services be provided to the 252,000 underserved citizens in the eastern part of our city and other credible, substantive recommendations. We wish you great success in this endeavor.

Sincerely,

Victor F. Scott, M.D. Senior Vice President for Health Sciences

President Swygert Responds to
Mayor's Task Force Announcement

April 19, 2006

Dear Howard University Community:

Three years ago, D.C. Council Chairman Linda W. Cropp held discussions with each of the major hospitals in the District to explore their willingness to consider a partnership to build a new facility in Southeast Washington, D.C. near RFK Stadium on federal land known as U.S. Reservation 13. Only Howard University responded affirmatively and was willing to explore moving forward.

In November 2003, the Council passed legislation authorizing D.C. Mayor Anthony Williams to enter into discussions with Howard University on a Memorandum of Understanding (M.O.U.) for the express purpose of building a new hospital that would be called the National Capital Medical Center (NCMC). This legislation was passed unanimously, and cited the uneven distribution of hospitals in the District as the principal reason for the proposed new hospital.

The University pursued this new partnership, in part, because it resonated strongly with Objective #26 of The Strategic Framework for Action II; namely, “continue to invest in the University’s capacity to provide area residents with high-quality healthcare, independent of their ability to pay”. As you know, Howard University has been providing leadership in medical education and healthcare, both nationally and for residents of the District of Columbia, for more than 140 years. Although Howard is a private not-for-profit institution and ours is the only university-owned hospital in the metropolitan area, historically Howard University Hospital has also been the area's flagship safety-net institution, training healthcare professionals and providing more uncompensated healthcare to uninsured and underinsured area residents than any other hospital.

The M.O.U. that was submitted to the Council in January 2004 called for the District and Howard University to develop a 200-300 bed, world class, full service, Level 1 Trauma hospital, a medical office building and a research center – precisely what the Council charged the partners to develop. Howard would own and operate the NCMC, but the District would provide some financial support. After a public hearing in March, the M.O.U. was passed unanimously by the Council in May 2004.

For the next 18 months, the Office of the City Administrator and Howard University worked together to complete the many programmatic, financial and technical studies necessary to complete the tasks outlined in the enabling legislation. In November 2005, Mayor Anthony Williams and City Administrator Robert Bobb joined the Howard University Board of Trustees retreat in Chantilly, Virginia, where the Mayor expressed his unambiguous commitment to the National Capital Medical Center.

The commitment of the Mayor of the District of Columbia was instrumental in the Board’s decision to proceed with the project. In January of this year, I was invited to join Mayor Anthony Williams at a press conference held in his office for the joint signing of the Exclusive Rights Agreement. And in February, the complete NCMC legislative package was forwarded to the Council of the District of Columbia for their review and action.

At no time during this entire three-year process did Mayor Williams ever express any doubts about either the need for or the feasibility of the project to me or to the public - even as late as Wednesday, April 5, 2006, when the Mayor and I last met to discuss the NCMC.

Last week, as the relevant Council committees were beginning their due diligence and reviews, rumors began circulating, by word of mouth and in the media, that Mayor Anthony Williams had changed his mind regarding moving forward with the NCMC. These rumors were subsequently confirmed at his press conference last Wednesday when Mayor Anthony Williams stated that he wanted to stop the process to look at other options.

When pressed by the media to explain his sudden change, he cited, among other things, his concern for the impact of the NCMC on Greater Southeast Hospital. Greater Southeast Hospital is a twice-bankrupt, private hospital, owned by an Arizona corporation and located on the Maryland line in a remote part of Ward 8. Greater Southeast does not provide trauma care.

The University recognizes that there can be no substantive improvement in the healthcare infrastructure of the District without some consequences. Moreover, we see the NCMC as essentially a question of fairness for the 252,000 residents who live in the Eastern part of Washington and who simply do not have the same access to trauma services and primary care as the rest of the city.

Anthony Williams, who is a lame duck mayor, announced today that he is suspending the effort to create the NCMC while a task force he has chosen “studies” other approaches and healthcare issues in the District for the next several months. This too shall pass.

Sincerely,

H. Patrick SwygertPresident

A Primer on the National Capital Medical Center

1. What is The National Capital Medical Center?

The National Capital Medical Center (NCMC) is the result of a proposed public-private partnership between the Government of the District of Columbia and Howard University to develop a world-class medical campus that will include enhanced primary care services, a medical office building and a biomedical research facility. As the inpatient facility on this campus, NCMC will provide a carefully selected range of acute inpatient, specialty outpatient, emergency and trauma services, drawing upon both community-based and University physicians. NCMC is being designed with state-of-the-art medical equipment and the highest quality patient safety and clinical information systems. It will be an efficient and attractive health care environment that will be both patient and provider-friendly.

The NCMC will also be an important part of a community-based system of care with a focus on prevention and wellness; and it will also have the capacity to support and enhance the District’s “Medical Homes” network for lower income patients. If approved, this significant project will also serve as an economic engine to enhance the transformation of its immediate community into the planned mixed-use Hill East Neighborhood, while also serving the population of the City’s most medically underserved Wards.

2. What is the origin of the NCMC?

In November 2003, the Council of the District of Columbia passed legislation to explore the development of a Memorandum of Understanding (MOU) between Howard University and the District of Columbia to develop a new, full service, world-class, Level 1 Trauma hospital on U.S. Reservation 13, adjacent to the D.C. Armory.

In January 2004, the President of Howard University and the Mayor of the District of Columbia signed the MOU.

In May 2004 after a public hearing, the Council of the District of Columbia unanimously passed the MOU.

Since then, both the University and the District have engaged healthcare experts, hospital facilities planners, leading general contractors and other relevant professionals in a series of substantive meetings with relevant governmental agencies to size the facility properly; assess its development, construction and operational costs; and structure the appropriate financial proposals to complete the project successfully.

There were also additional public hearings of The Council of the District of Columbia in February and October 2005 to ensure that appropriate progress was being made.

3. Why did the City choose Howard University?

Howard University has been providing leadership in medical education and healthcare, both nationally and for residents of the District of Columbia, for more than 140 years. It currently sponsors the only university-owned, not-for profit, hospital in the entire metropolitan area.

The University has a recent history of successful collaboration with the Government of the District of Columbia to strengthen the District. Several years ago, the University and the District joined forces to create The LeDroit Park Initiative, an award-winning public-private partnership that has helped to transform an important part of the District and has become a national model. Howard is also the only area university to have established a public charter school for District residents, the Howard University Middle School of Mathematics and Science.

The Chairman of the Council of the District of Columbia held discussions with each of the major hospitals in the District to assess their interests in partnering with the District of Columbia to build a new facility in Southeast Washington, D.C. Only Howard University expressed a willingness to move forward.

4. Why does the District need the NCMC?

The District’s major teaching hospitals, including all of our trauma facilities, are clustered in the same Northwest quadrant.

42% of the District’s population lives in the Eastern quadrants.

The District needs a hub for its new community health network, where doctors can refer patients for diagnostic testing, specialty care, and medical procedures.

To maintain its competitiveness against other major cities with sophisticated medical complexes, and to be competitive for the highest quality students and faculty, the District and the University need to develop state-of-the art facilities.

The current clustering of District hospitals could be problematic in the event of a major disaster.

5. Who will the NCMC serve?

6. Will the National Capital Medical Center add any more licensed beds to the District?

No. Under the NCMC proposal, Howard University Hospital would transfer 230 of its existing 482 licensed beds to the new facility. There would be no new licensed beds required.

7. Who will operate the NCMC?

A new private, not-for-profit healthcare corporation will be established. The NCMC is the kind of project capable of attracting top talent and, once approved, the Directors of the new corporation will immediately begin to recruit a team of professionals with relevant experience and proven ability to implement the project.

8. What services will the NCMC offer?

24 hours-a-day, 7 days-a-week emergency and trauma service

Inpatient surgeries with a focus on minimally invasive procedures

Outpatient services:

Surgery

Radiology

Laboratory

Wellness and prevention services including nutrition counseling, support groups, and physical fitness classes

Specialty Services

A medical office building housing University faculty and community physicians

Other related services such as a community health club

9. How will NCMC relate to Howard University Hospital?

To enhance efficiency, both the NCMC and HUH will be controlled by the same new healthcare corporation that the University will establish. A number of services currently offered on the HUH campus (including trauma care) will be moved to NCMC. Every effort will be made to ensure that there will be no unnecessary duplication of services between the two campuses.

10. What is the cost of the NCMC hospital?

The estimate of the Project Costs (in 2007 dollars) is $382 million. The District and the University will fund the construction of the hospital on a 50-50 basis. Based on the current estimate, each party’s 50% share of the Project Costs will be $191 million. The parties will also establish a 20% contingency fund.

11. How will the University fund its contribution?

The University intends to use tax-exempt revenue bonds to finance its portion of the NCMC. The bonds will be issued through a governmental conduit of the District used by other nonprofit organizations for similar financings in order to qualify for tax-exempt status.

The NCMC’s obligation to repay the bonds will be secured by hospital revenues and a debt-service reserve fund. In order to access the tax-exempt bond market with a security that will be attractive to investors and provide the lowest possible interest cost, NCMC intends to apply for mortgage insurance from the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development, under Section 242 of the National Housing Act. The FHA mortgage insurance provides credit enhancement for the bonds that will result in bond ratings in the highest rating categories.

When approved, the FHA will issue a commitment to insure a mortgage note under which NCMC will grant FHA a first mortgage lien on the hospital and its revenues, and related equipment.

12. How will the District fund its contribution?

The District will engage in an additional Tobacco Settlement Securitization transaction with the potential to generate funds of approximately $200 million based on current market conditions. This securitization transaction could be completed within a relatively short period of time, and thus could yield revenues to be used in early phases of the project.

13. How will any unforeseen or unexpected costs or cost overruns at NCMC be funded?

Any unexpected costs or cost overruns (capital or operational) beyond that which are covered by the joint contingency fund will be the responsibility of the New Corporation.

14. What is a Certificate of Need?

The Certificate of Need (CON) is a regulatory process, used by some states (including the District of Columbia) to permit a state (or District) agency to decide whether a proposed new health care facility is needed.

15. Why is the District recommending that the Council grant the NCMC an exemption from the Certificate of Need program?

It is our understanding that the District is recommending that the Council exempt the NCMC for several reasons:

First, it is the District government itself that has determined that there is a compelling public need to develop a privately operated, state-of-the-art medical complex on this site. By agreeing to fund half of the cost of NCMC, the District has determined that it is in everyone’s best interest to get the proposed new services to the community as soon (and as cost-effectively) as possible.

Second, because the NCMC is a public-private partnership, it is subject to substantially more public review and analysis by the D.C. government than any project going through the routine CON process.

Third, the NCMC will also be subject to a rigorous programmatic, financial and architectural/engineering review by the federal government to qualify for FHA mortgage insurance.

The Federal Review will analyze:

The scope of the proposed NCMC

Current and projected services

Evidence of community need for the hospital and its services

Construction alternatives considered

Audited financial statements

Operating statistics

Financial feasibility

Fourth, the beds and services in the proposed NCMC have already been determined to be needed at Howard University Hospital; this proposal does not request any new licensed beds – it merely transfers beds and services currently in HUH’s license from an area where comparable services already exist to an area closer to a population that has limited access to them.

Fifth, a CON process can be manipulated to delay worthwhile and important projects for as long as 4-5 years. Such a delay could more than double the cost, make the NCMC no longer feasible and deprive half of the city of critical trauma services.

Sixth, the CON process is administered by a subordinate appointed group. The Council of the District of Columbia has the authority to make appropriate exemptions when there is a compelling public purpose. The Council has demonstrated that it is fully capable of representing the interests of the citizens of the District of Columbia.

16. What are the next steps?

As agreed, the District and the University completed their negotiations on an Exclusive Rights Agreement on 30 December 2005. The parties completed work on the lease and the grant agreements and the Certificate of Need exemption on 6 February 2006. This will allow the Council to review all of the relevant agreements for the NCMC, and to act as early as 7 March 2006.

Documents

Exclusive Rights Agreement(PDF - 374 KB)
The ERA is a comprehensive document that identifies the project's scope; the financial commitments; the construction obligations; the performance requirements and the development timetables.